Testing the water before taking the plunge

The recent high-profile openings of Wola Park and the Galeria Mokotów extension in Warsaw, brought with them the arrival of a number of retailers, who were exposing themselves to the Polish market for the first time. The tendency among these,  for the moment anyway, is to tread carefully rather than unleash themselves aggressively onto the local market.

"I wouldn't really call it a big rush," says Magdalena Gniazdowska, Senior Negotiator of Cushman & Wakefield H&B's retail department, of foreign retailers' desire to gain a foothold in Poland. "As far as middle-sized spaces and anchors are concerned there have been no real major changes, [in the Polish market], but there will be," she continues. The arrivals of clothing shops such as Lene V, Kenvelo and Peek & Cloppenburg for example, don't represent for her any radical sea change, but once the much anticipated Złote Tarasy multi-functional centre opens in 2005, between the Holiday Inn and the central railway station in Warsaw,  Poland might then expect to herald a new era in shopping. "It will be a year and a half after Poland joins the EU, so foreign retailers will be in a position to assess the market from a clearer perspective," says Ms. Gniazdowska of the centre. Cushman & Wakefield H&B's latest research into 'cross-border retailing' in fact shows, that during the accession period, (2003-2008 are the dates given, covering both the eve of membership and the full rights that will be in place by 2007), Poland will welcome 131 new entrants onto its retail market. Until then, the tendency will be to test the water before taking the plunge.
So far, it has been in the mid-market clothing sector that Poland has witnessed most significant activity from foreign retailers and Anna Bartoszewicz-Wnuk, Retail Analyst at Jones Lang LaSalle claims her firm are, "currently negotiating with a few foreign fashion retailers who are interested both in projects in Warsaw and other major cities in Poland". We now look at some examples of those who've arrived in the past couple of months or so.

Looking and learning
At first glance the Norwegian women's fashion retailer Lene V's activities in Poland have been anything but cautious, having opened three shops in Warsaw over the first six weeks of Autumn: the first in Klif on August 28th, the second in Wola Park on September 18th and then in the extended Galeria Mokotów on 8th October. Now however, according to Johnny Jensen, Lene V's representative in Poland, "we are going to stop for a few months and wait and see what happens". If  the new shops are successful, the chain will expand to between 20 and 25 shops throughout Poland in cities of over 200,000 people, which will include Tri-City, Poznań and Szczecin in the first instance. Over a longer, ten year period, Lene V envisages fifty of its shops operating throughout the land, when it will also consider franchising its brand.
Czech-based Kenvelo, who focus on youth designer-fashion, was another chain who opened their first store in Warsaw recently: in Wola Park.  According to Development Manager Tomas Jokl, they too will be carefully assessing their performance, though by the end of next year, they could well have ten to sixteen new shops retailing in Poland's major cities. In four to five years, that might go up to eighty.

Serious plans
Like other German retailers such as C&A and Media Markt, the A-brand clothes' chain, Peek & Cloppenburg, have embarked on an expansion strategy that focuses on their closest neighbours. As well as Germany, they currently operate in Belgium, Holland and Austria, where they set up shop in 1998. On October 8th, as part of their new plans for Central Europe, they became the Galeria Mokotów extension's anchor tenant with 3,200 sqm.  Though this represented much more than a tentative step as far as their Polish activities were concerned, compared to their outlets in Germany, which average at 10,000 sqm., it seems quite modest. However, Managing Director of Retail Sales, Marcus Kossendey manages to convince that his company's plans for Poland are very serious.

Test shops
Peek & Cloppenburg's first store in Warsaw was a test shop in the Reduta shopping centre of 300 sqm, which they opened a year and a half ago and closed in 2001. They then opened a second experimental outlet in Sadyba Best Mall of 500 sqm, which has proved to be very successful. So when the offer came at the beginning of this year to rent space in the extended Galeria Mokotów, it was too good to turn down.
Interestingly, the 3,200 sqm 'flagship' store contains an element that would not find its way into one of similar size in P&C's German base. Given Polish consumers "affection for brands", according to Mr. Kossendey, Peek & Cloppenburg have decided to introduce an 'Exclusive' Department to its new store. In Germany, this would only happen in stores of 10,000 sqm. or more.
In 2004, if the Galeria Mokotów store does well, Peek & Cloppenburg will open another but bigger and also in Warsaw. Following that, the company has its eye on the North-West region of Poland, and Poznań and Gdańsk in particular.
"At the moment we have enough space but with a second store we'll have an even better chance of success," says Mr. Kossendey.
Peek & Cloppenburg may well typify foreign retailers' caution but there's no disputing that they see their presence in Poland as long-term.